Property & Casualty Basics (Ohio)

Split Limit 25/50/25

25k for max Bodily Injury (BI) to any ONE person / 50k for max BI for two or more people / 25k max for Property Damage (PD)

Combined Single Limit

A single dollar amount limit of liability applying to the total of damages for bodily injury (BI) and property damage combined, resulting from one accident or occurence

Deductible

Agreed amount insured pays on a claim before insurer pays for the loss.

Market Value

Amount willing buyer would pay willing seller

Insurable Intereste

Applicant or another party (ex. Mortgagee) must have legitimate interest in preservation of life or property.

Named Peril Form

Basic and Broad form covers only the perils named in the form

Insured Cancellation

Cancel anytime. If cancelled a short rate refund issued

Special (All Risk or Open Perils) Form

Covers all Perils except those excluded in the policy

Strict Liability

Damages caused by defective products even though manufacturer negligence cannot be proven

Direct Loss

Damages to dwelling or its contents.

Absolute Liability

Due to extremely dangerous operations.

Comparative Negligence

Each party has fault

Cancellation

Either insured or insurer can cancel a policy. Insured cancel at anytime. Insurer can only cancel for non-pay or policy violations.

Negligence

Failure to behave in the same manner as a reasonable and prudent person would behave in the same situation

Other insurance

If more than one insurer on same risk they will share loss proportionately and total payment not to exceed loss.

Coinsurance

Insure property closer to full value.

Duty to Defend

Insured limit for legal defense costs

Primary elements of a negligent act

Legal duty (did a standard of care exist) Breach of duty (was that duty violated) Proximate cause of loss (unbroken chain of events starting with negligent act) Actual Damages (injury or property damage to a 3rd party as a result)

Limits

Liability and Property policies are on an occurrence basis, meaning the most a policy will pay for that single event is the declared limit.

Indirect Loss

Losses resulting from a peril but not directly caused by it.

Limit of Liability

Maximum amount for which insurer is liable

Per Person Limit

Maximum payment for bodily injury to any one person.

Insurer Non-Pay Cancellation

Must give at least 10 days notice and pro rata refund issued

Insurer Other Reasons Cancellation

Must give at least 30 days notice and pro rata refund issued

Cause of Loss (Perils) Forms

Named Peril and Special Form

Vicarious Liability

One person is responsible for the acts of another person.

Special Damages

Out of pocket cost of medical bills, loss of income, rehab expenses directly associated with event.

Assumption of Risk

Person assumes risk after being warned of potential danger

Valued Policy

Policy pays full limit for total loss, used when value is hard to establish

Agreed/State Value

Pre-agree to fair value of property, no coinsurance

Primary & Excess

Primary insurer pays first until limit is exhausted then Excess insurer pays remaining until exhausted.

Underwriting

Process of reviewing, accepting or rejecting applications for insurance

Gross Negligence

Reckless Behavior that shoes disregard for the safety or lives of others

Actual Cash Value (ACV)

Replacement cost minus depreciation

Damages

Special, General, Punitive

Non-renewal

Termination of policy by insurer on the anniversary or renewal date. No refund given

Equal Shares

Two or more companies at same level pay loss in equal shares until loss is paid or limits exhausted.

Policy Territory

USA, territories, possessions, Puerto Rico & Canada

Short rate refund

Unearned premium minus an administrative fee refunded to insured

Pro Rata refund

Unearned premium refunded to insured

Loss Ratio

calculation used to relate income from loss expenses

Aggregate Limit

caps the maximum payment in any one policy period. Usually found in Commercial Liability policies.

Combined Split Limit (CSL)

combined Bodily Injury and Property Damage limit using the maximum limits for both BI and PD (75k in 25/50/25)

Specific Insurance

covers a specific property at a set limit amount

Replacement Cost

current cost without depreciation

Punitive Damages

financial payment

Functional Replacement Cost

items replaced with less expensive materials that provide the same function.

Liability

legal obligation to pay for damages one may have participated in causing

Protection Class

numerical rating system for community rating

General Damages

pay over and above for longer term care, disfigurement, pain and suffering

Blanket Insurance

provides coverage for multiple classes of property & locations; one limit for all locations

Split Limit

separately stated limit of liability for different coverages, which may be state on a per person, per occurrence, per policy period basis or can be divided between bodily injury (BI) and property damage (PD).

Policy Term

starts 12:01am one year from inception to expiration

Insurance Rate

unit cost for a particular amount of coverage

Liability Limits

written on Split Limit or Combined Single Limit